Lighter (LIT) increased by 3.68% in the last 24 hours and its daily trading volume increased by 13.52%. In the last week alone, the token gained 18% in value.
In a recent report, AMBCrypto warned that the token has overbought potential and could see a correction towards $2. Now, in the following days, LIT fell nearly 13% to $2.3. However, it has since risen once again to $2.60.
In an article on X, Lighter It revealed that 15.6 million LIT tokens worth more than $42 million were burned. This represented approximately 6.3% of the LIT circulating supply of 250 million tokens and 1.5% of the total supply of 1 billion tokens.
This big drop on July 10 could have triggered short-term bullish momentum for the altcoin. In fact, price action has shown that a move towards $3 may not be too far away.
Why can lighter price trends become overextended?
A downward trend is visible on the 1-day chart. The price made a higher high while the RSI made a lower high, a classic bearish trend. Volume trends have been steadily upward, but the bearish momentum divergence has warned of a potential price pullback.
Despite the divergence, demand for the altcoin increased. strong.
Fibonacci retracement levels were drawn based on the upward swing movement from $0.83 to $2.76.
If LIT falls below the 23.6% Fibonacci retracement level of $2.30, swing traders and investors can expect a deeper pullback. Until then, patience is required.
Investors’ call to action – Play the range
The 1-day chart warned of a pullback. The 4-hour chart showed a range formation between $2.31 and $2.68. After two attempts in July, neither end of the range has been breached so far.
Investors can wait for an uptrend above $2.70 to buy LIT targeting $3.06 and $3.21. On the other hand, a break below the $2.31 range low and the 23.6% Fibonacci retracement level of $2.30 on the 1-day time frame suggest that a pullback below $2 is becoming more likely.
Final Summary
- The demand and bullish momentum for Lighter continued to exert its influence despite the signal of divergence from the bearish momentum.
- Traders will want to watch short-term range formation for clues as to the direction of the next move.
